Would you recommend the additional purchase

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Reference no: EM132110351

A company manufactures two products A and B. The unit revenues are $(8) and $(10) respectively. Two raw materials (M1 and M2) used in manufacture of the two products have daily availabilities of (12) and (21) units respectively. One unit of A uses 2 units of M1 and 2 units of M2, and 1 unit of B uses 3 units of M1 and 6 units of M2.

a) Determine the shadow prices of M1 and M2

b) Suppose that 4 additional units of M1 can be acquired at the cost of 30 cents per unit. Would you recommend the additional purchase?

c) If M2 availability is increased by 5 units, determine the associated optimum revenued) What is the most the company should pay per unit of M2.

Reference no: EM132110351

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